Last week, you might have seen that Coupa Software Incorporated (NASDAQ:COUP) released its third-quarter result to the market. The early response was not positive, with shares down 2.3% to US$150 in the past week. The results were mixed overall, with revenues slightly ahead of analyst estimates at US$102m. Losses by contrast were8.7% larger than predictions at US$0.42 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest forecasts to see whether analysts have changed their mind on Coupa Software after the latest results.
Following the latest results, Coupa Software's 20 analysts are now forecasting revenues of US$486.6m in 2021. This would be a substantial 38% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 24% to US$1.69. Before this earnings announcement, analysts had been forecasting revenues of US$478.4m and losses of US$1.52 per share in 2021. So there's definitely been a decline in analyst sentiment after the latest results, noting the real cut to new EPS forecasts.
As a result, there was no major change to the consensus price target of US$160, with analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Coupa Software, with the most bullish analyst valuing it at US$185 and the most bearish at US$100.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Next year brings more of the same, according to analysts, with revenue forecast to grow 38%, in line with its 35% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 12% per year. So it's pretty clear that Coupa Software is forecast to grow substantially faster than its market.
The Bottom Line
The most important thing to take away is that analysts reconfirmed their loss per share estimates for next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Coupa Software's revenues are expected to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Coupa Software. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Coupa Software going out to 2024, and you can see them free on our platform here..
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